Planned Assault on Republican Bastion Lands McGreevey in Power Struggle

By DAVID KOCIENIEWSKI

Published: September 17, 2003

TRENTON, Sept. 16—
Gov. James E. McGreevey's plan to shake up the leadership of the Casino Reinvestment Development Authority, a rich source of political patronage, has set off a heated battle between the governor and one of Trenton's most powerful Republicans.

The agency, which is allotted a portion of profits from Atlantic City casinos and doles out tens of millions of dollars each year to finance public development projects, has long been part of the political power base of Senator William L. Gormley, a Republican of Atlantic County. In recent months, however, the McGreevey administration has been pressuring the executive director of the agency, an ally of Mr. Gormley's, to step aside, even though his tenure is set to run through next June.

Mr. McGreevey's aides say that the governor is troubled that a series of bureaucratic delays at the authority have jeopardized $35 million in federal funds that were pledged for a housing project. On Monday, the administration sent a team of auditors to examine the financial records at the authority, in a very public move that was widely interpreted as an effort to hasten the departure of the executive director, James Kennedy.

''This is a simple matter of accountability,'' said Micah Rasmussen, a spokesman for Mr. McGreevey.

But Mr. Gormley has characterized the administration's actions as a power grab, and accused Mr. McGreevey of trying to punish him for aggressively fighting the governor's proposed increase on casino taxes during the budget negotiations in June. Mr. Gormley also warns that the drive to oust Mr. Kennedy will ultimately hurt the effort to rebuild Atlantic City by allowing the authority's money to be siphoned to other projects around the state.

''The governor has already caused layoffs in South Jersey because of his tax policies,'' Mr. Gormley said today, ''and it's unfortunate that he now wants to cause more unemployment just because he doesn't like a state senator. Can't he find a better way to settle his political scores?''

Since 1984 the authority has received 1.25 percent of the profits of Atlantic City's casinos and has disbursed nearly $1 billion for public works projects and residential development and to spur expansion of casino hotels in Atlantic City. In recent years the agency has also diverted a portion of its money to projects in other parts of the state. Because the authority awards millions of dollars in contracts each year, the political official who controls it can also attract campaign contributions from engineers, consultants, law firms and others hoping to get business.

Mr. Gormley helped write the legislation that founded the authority, and said that Mr. Kennedy, who has been executive director since 1993, had done an admirable job using the fund to revitalize Atlantic City and provide jobs for economically troubled South Jersey.

But Mr. McGreevey, who had a warm relationship with Mr. Gormley during his first year as governor, became angry this June, his advisers said, when he heard reports that Mr. Gormley had offered to use authority money to finance a project in the district of a Democratic lawmaker in exchange for a vote against the governor's casino tax plan.

In the months since reaching a budget agreement, the administration has repeatedly raised questions about leadership of the development authority because the agency has been unable to identify $22 million it pledged for a South Jersey housing project, and may lose $35 million in federal matching funds.

Mr. Gormley flatly denies offering authority money as part of any negotiation to fight the casino tax, calling the assertions ''an absolute lie.'' He suggests that the McGreevey administration has its own ulterior political agenda and wants to replace Mr. Kennedy with an ally of Robert G. Torricelli, the former United States senator who now works representing several real estate developers.

But Mr. Rasmussen said Mr. Torricelli, whose former employees now hold several key positions in the administration, would have no role in the future of the authority.

''Mr. Torricelli has nothing to do with any of this,'' Mr. Rasmussen said. ''They are only raising his name to divert attention from the real issues.''